Assignment #7 Example #2: Inventory valuation-gross method Kimi Corp. reported the following transactions with regard to merchandise inventory during the second quarter of 20x1, April 1 to June 30. Shipped $5,000 of its merchandise to Lexi Inc. Lexi has agreed to sell this inventory on the behalf of Kimi Corp. Kimi purchased 108,000 units priced at $23 per unit under invoice terms 2/15, n/40. The goods were shipped FOB destination and arrived at Kimi's docks on April 15. Kimi did not pay in the discount window and returned 750 units on June 19. Kimi purchased 89,100 units priced at $27 per umit under terms 2/15, n/30. The goods were shipped on June 20, FOB destination, and were still in transit on June 30. Kimi paid in the discount window on July 3 when the merchandise arrived Kimi purchased 40,500 units priced at $25 per unit under terms 3/10, n/30. The goods were shipped FOB shipping and were still in transit on June 30. Shipping fees of $1.50 per unit were assessed as Kimi's responsibility. Kimi paid within the discount window. 1. Provide journal entries (where necessary) assuring Kimi uses the gross method for discount accounting and a periodic system for recording inventory transactions. 2. Provide any changes that would occur if a perpetual system of inventory was used. 3. Assume the company began with $731,000 of beginning inventory and determined, by physical count, that it had $553,025 of inventory at the end of the month (assume this includes all inventory the company has legal title to even when it is not on premises). Provide the entry to record cost of goods sold assuming a periodic system is used. Example #4: Cost flow methods - Purchase Discounts, Returns and Freight-in Colt McCoy Co. started had the following transactions related to inventory in December. Beginning inventory December 5 Purchase December 7 Sold December 20 Purchase December 25 Sold December 26 Purchase December 28 Purchase December 30 Sold 40 units at $11 per unit 25 units at $12 per unit 20 units 2% discount, 2 retums, $0.30 freight 3% discount, $0.30 freight 4 returns, $0.30 freight S0.30 freight 20 units at $10 per unit 30 units 40 units at $13 per unit 30 units at $12 per unit 25 units The price per unit of each purchase including discounts and freight is: December 5: $12 0.98+0.30 = $12.06 December 20: $10 0.97+0.30 = $10 December 26: $13+0.30-$13.30 December 28: $12+0.30 $12.30 Colt uses the gross method for recording discounts and purchases all inventory through accounts payable. Colt paid within the discount window on all purchases. Freight is paid in cash and receives no discount. All returned units receive reimbursement on any freight. 1. Provide journal entries to record the purchase of units on December 5 using both a perpetual and periodic method. Assume returns are made prior to payment. 2. What is ending inventory using a LIFO perpetual cost method? Provide and date the journal entries to record all COGS under this method. 3. What is ending inventory using weighted average perpetual? Provide and date the journal entries to record all COGS under this method. 4. What is ending inventory using FIFO periodic? Provide and date the journal entry to record all COGS under this method. I